David Zervos is ecstatic

The ECB's balance sheet has been opened up via the ESM to directly recapitalize the European banking system. And that my friends is a game changer!! Oh yes, they finally figured it out - separating bank financing from state financing is the key to lifting the systemic risk cloud that has been hanging over the entire GLOBAL financial system. Having an effective backstop, and resolution structure, for bad European banks is all we wanted. Was it really that much to ask for? No one wanted to see the entire Irish state saddled with the cancer that had infected the Irish banks. That was insanity! And here in the US we don't care if Europe has structural growth problems or labor market inefficiencies. If everyone Frenchman wants a 35 hour work week so be it! And we don't need European growth for global growth. But what we can't have is a European banking run with systemic global ramifications. When the top 6 banks in the US have 300 TRILLION in OTC derivatives, much of which is linked to the European banks, we will have serious problems if the European banking and monetary system breaks. That card however has just been taken off the table. The ESM, with access to the ECB balance for leverage, is a fiscal backstop (with a printing press) for the resolution of bad European banks. Hallelujah!!!! This is a huge step in the right direction for the global reflation trade.

Risk on, here we go:
Germany lost a much bigger battle yesterday - the one for ECB balance integrity and mutual fiscal burden sharing for European bank losses. That loss I suspect will send risk assets MUCH MUCH higher than Balotelli's gaming clenching goal.